Inflation picks up again
Consumer price inflation was higher than expected in the September 2025 quarter, at 1.3 per cent.
The largest contributor - perhaps unsurprisingly! - was electricity costs, which rose again by 9 per cent.
Gas prices rose by a further 6.7 per cent over the course of three months, following annual price reviews.
There was also inflation in insurance, and inflation there was too in property taxes in the guise of rates and charges, which rose by 6.3 per cent.
The important core or 'trimmed mean' inflation reading was 1 per cent for the quarter, plenty higher than the economists' median market forecast of 0.8 per cent, taking this measure of inflation back up to 3 per cent over the year to September.
So, core inflation is back at the top of the target band again.
Even after last quarter's miss, the two-quarter annualised reading for trimmed mean inflation re-accelerated to 3.3 per cent.
This has come at a time when internationally oil prices have been low.
The inflation has largely been 'homegrown', largely due to a combination of high population growth and expensive energy bills.
There may yet be further unwelcome price increases to come, with annual rental price inflation still officially in decline - while in real time rental markets have been tightening, and asking rents have been rising more quickly again.
The wrap
Overall, this was a messy quarterly result which will keep interest rates on hold until at least February 2026 - and even still the transition to a monthly inflation measure will make the path ahead less than certain...even if there are to be downward pressures on inflation ahead.
In the past, it is true, September inflation figures have sometimes come in hot, only for the surprise to be reversed in the December quarter.
Australia may face a similar dynamic to the United Kingdom (or to some extent New Zealand) where inflation has been above target, but the unemployment rate has been consistently rising.
Canada has managed to get its inflation rate down, but partly at the expense of a very high unemployment rate of above 7 per cent, while cutting immigration settings back.
Which trajectory Australia follows is as yet unclear - the risk is that hiring in the economy has been dependent on the non-market sector for a long while now, and as AI takes more roles out of the market sector the unemployment rate bounds higher.
In summary, even though it looks as though the jobs market has stalled, and the unemployment rate is rising back towards 5 per cent, there will be very little appetite for lowering interest rates any further after today's inflation figures...for at least a few months.
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